Which of the Following Statements Correctly Defines Hedging

question 77

Multiple Choice

Which of the following statements correctly defines hedging?

• A) Hedging is the transfer of a risky asset for a non-risky asset to protect against uncertainty.
• B) Hedging is the profit earned by an exporter due to a fall in the exchange rate.
• C) Hedging is the profit earned by accurately forecasting the value of an exchange rate.
• D) Hedging is the loss made by an importer due to a fall in the currency value.

---

Definitions:

Chronic

Referring to a condition or disease that is persistent or long-lasting in its effects, often for a person's lifetime.

Scaly

Covered with scales or flaky skin, often indicating a skin condition.

Itching Rashes

Skin eruptions that are characterized by redness, itchiness, and sometimes swelling.

Sudoriferous Glands

Glands that produce sweat, involved in body temperature regulation and waste excretion.